# USDA loan

> A USDA loan is a mortgage guaranteed by USDA Rural Development for moderate-income buyers in eligible rural areas, with no down payment required.

URL: https://mortgage-math-us.com/glossary/usda-loan/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A USDA loan** — formally a Single Family Housing Guaranteed Loan — is a mortgage from an approved private lender that USDA Rural Development guarantees, letting eligible buyers finance the full price with 0% down. It is limited to homes in eligible rural areas and to households earning no more than 115% of the area median income.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Household income limit (share of area median) | 115% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 |
| Share of the loan USDA guarantees to the lender | 90% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 29, 2026 |
| Upfront guarantee fee | 1% | [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) | FY2026 |
| Annual fee | 0.35% | [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) | FY2026 |

## Two eligibility tests: place and income

The address must fall in an area USDA classes as eligible — mostly rural places and small towns — which you can check on USDA’s eligibility map. The income test counts the whole household, not just the people on the loan. The home must be your primary residence. Because USDA guarantees 90% of the loan to the lender, the program can do without a down payment. Separately, USDA lends directly to low- and very-low-income buyers through its Direct loan program.

## What the guarantee costs

Instead of mortgage insurance, you pay an upfront guarantee fee of 1%, which can be financed, and an annual fee of 0.35% collected in monthly payments. On a $250,000 loan, that’s $2,500 upfront and about $875 in the first year, roughly $73 a month, against about $115 a month of FHA [mortgage insurance premium](https://mortgage-math-us.com/glossary/mortgage-insurance-premium/) at 0.55%. See the [USDA loans guide](https://mortgage-math-us.com/loan-types/usda-loans/) for the debt ratios and how to check an address.

## Related terms

- [Down payment](https://mortgage-math-us.com/glossary/down-payment/)
- [FHA loan](https://mortgage-math-us.com/glossary/fha-loan/) and [VA loan](https://mortgage-math-us.com/glossary/va-loan/), the other government-backed options

## Sources

- [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee; USDA guaranteed loan annual fee (FY2026)
- [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023)
- [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income); USDA guaranteed loan: loan note guarantee to approved lenders (Oct 28, 2026)
- [USDA Rural Development: Single Family Housing Guaranteed Loan Program](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program)

_General information, not financial advice._